David Richards grabs a glass during the groundbreaking ceremony for the expansion of the Karbach Brewing Co., Tuesday, March 25, 2014, in Houston. The $15 million expansion project on Karbach Street will be able to produce 60,000 barrels annually with room for future growth. In addition to more beer, Karbach also expects to add a projected 100 jobs to the Houston community. ( Michael Paulsen / Houston Chronicle ) less

David Richards grabs a glass during the groundbreaking ceremony for the expansion of the Karbach Brewing Co., Tuesday, March 25, 2014, in Houston. The $15 million expansion project on Karbach Street will be ... more

Photo: Michael Paulsen, Staff

Image 2 of 3

One of the local and craft beers on tap at City Oven.

One of the local and craft beers on tap at City Oven.

Photo: Gary Fountain, Freelance

Image 3 of 3

BEER Act is for you

1 / 3

Back to Gallery

Recent coverage of the record-high growth of new breweries "Report says craft brewers add billions to Texas economy" (Page D6, Dec. 29) highlights a compelling story of American ingenuity and entrepreneurship, but it's only half of the story. The other half is a story about how a little-known but well-established tax credit has worked with the support of both small and large brewers.

At the heart of the growth is a policy designed to be a "pathway to the marketplace" for small brewers - a policy embraced by major brewers and endorsed in proposed legislation that would protect beer drinkers from paying an even higher federal beer tax than they already do.

Under the existing tax structure, small brewers (defined in U.S. Tax Code as those that produce up to 2 million barrels per year or the equivalent of 110 million six-packs) receive a substantial break on federal excise tax, paying only $7 per barrel on the first 60,000 barrels. The regular tax rate is $18 per barrel, which is paid by all brewers of more than 2 million barrels, all beer importers regardless of size and on every barrel produced by small brewers beyond 60,000.

More than 40 percent of what you and I pay for beer goes toward taxes of some kind, on a national average. That makes taxes the most expensive ingredient in your beer. In 2012, the industry paid $49 billion in federal, state and local taxes, according to the Beer Serves America analysis put together by the Beer Institute and the National Beer Wholesalers Association.

The brewing industry is the top of a commercial pyramid in America that puts 2 million people to work, from factory hands to farmers, from brewers to bartenders. The industry's overall contribution to the economy totaled more than $246.5 billion in 2012. In Texas, beer contributed more than $21 billion to the economy and supported 160,390 jobs in nearly every community.

We support the tax credit for small brewers - a tax break that was expanded relative to major brewers when big brewers saw a 100 percent hike in their federal excise taxes - and we also need to prevent beer taxes from going up for everyone. That's what makes the bipartisan Brewers Excise and Economic Relief Act of 2013 - or BEER Act - all that more important.

The BEER Act would roll back the federal excise tax from $18 for every barrel of beer to the historic rate of $9 a barrel. For brewers producing less than 2 million barrels annually, the rate would be reduced to $3.50 on the first 60,000 barrels; and for those brewing less than 15,000 barrels - about 90 percent of all brewers - the federal excise tax would be eliminated entirely.

The BEER Act does not pick winners and losers within the industry. And in fairness to beer drinkers - who ultimately pay these taxes - it does not give one set of consumers a tax break while continuing to impose already-high, regressive taxes on another.

The BEER Act is fair, equitable and comprehensive, covering all brewers, large and small. It is a pro-growth bill, allowing for even greater investment in this national industry.

And that's something to which we can all raise a glass.

Thorne is vice president of communications for The Beer Institute, the national trade association for the American brewing industry, representing both large and small brewers, as well as importers and industry suppliers.